4 Ways to Thrive as a Loan Originator in a Rising Interest Rate Environment
Let’s face it – it’s easier to sell loans when interest rates are low.
Over the past decade, the Federal Reserve has kept rates at rock bottom, producing one of the easiest sales environments for loan originators in memory. But a confluence of factors has recently contributed to a dramatic rise in interest rates in 2022, making most consumers skittish and less likely to spring for a refinancing or buy a new home with a traditional mortgage.
What’s a loan originator to do to maintain steady business? This economy might present more challenges for loan originators, but the best and brightest in any industry can typically find ways to succeed, regardless of the economic conditions around them. Will this year be the year you secure your future as a loan originator, or will your business go south like so many did in the last real estate bust just over a decade ago?
If you follow the tips and tricks we’ve compiled here, you’ll be in a better position than most of your peers to capitalize on rising interest rates. Let’s take a look at some straightforward ways you can thrive as a loan originator when interest rates rise…
(Re)focus on speedy service
Most borrowers see loans as a sort of commodity, which means they’ll seek out the most favorable terms from anyone who’ll give them a quote. However, when all else is equal, a borrower will probably choose to work with the originator who provides the promptest and most pleasurable service.
Statistically, this means you should focus on speed as well as service – nine out of ten customers want an “immediate” response to their queries, with “immediate” typically meaning ten minutes or less.
Fast response times can help you get more sales, too. It’s estimated that between 30% and 50% of sales will go to the first vendor or service provider who responds to a customer inquiry. Since the average first response time is a lot closer to ten hours than ten minutes, implementing better sales and customer-service processes (particularly in conjunction with automated technologies) can help you and your team of loan originators stand out in a crowded field.
There are tons of ways to streamline and speed up your response times with automated processes. Floify automates many steps in the typical loan-origination process, from application to close. With the right tools, you can make loan origination as easy for your customers (and your team) as checking out a book on Amazon. Check it out by scheduling a free demo today.
While we’re on the subject of automation, let’s talk about some steps you can take to improve both front-end (customer-facing) and back-end (originator-facing) experiences.
Optimize your tech stack
The tools available to loan originators change and evolve quite often. Today’s bleeding-edge tech stack could turn into tomorrow’s dinosaur if it doesn’t keep pace with what borrowers and lenders demand from their experience.
Most loan originators tend to double down on their sales outreach when markets tighten. There’s nothing wrong with this approach, but if you and your team have enough downtime to send out more emails and make a bunch more cold calls, you might find greater long-term value in shoring up your entire front-end and back-end tech stack. This extends beyond automating some traditionally cumbersome aspects of loan origination to include your CRM, your marketing automations, and your customer-support tools, among other things.
If your company is large enough to support an internal IT department, consider having them audit your tech stack. A tech audit should uncover inefficiencies, redundancies, and opportunities for improvement throughout your business, providing you with a starting point from which to adopt new technologies and/or improve existing technologies or processes.
A modern tech stack should make lead generation simpler and faster, make it easier to manage and nurture your leads, and should certainly make it easier to convert leads into customers. Any points of friction between a loan originator and their leads can result in lost business, especially when you’re competing against all the other originators in the same rising-interest-rate boat.
Work your network
There are plenty of quotes on the value of a strong network. “You are the average of the five people you spend the most time with” … “your network is your net worth” “it’s not what you know, it’s who you know” … and so on.
A strong and well-maintained network can make all the difference between success and struggle in a challenging interest rate environment. Realtors want to work with partners who make the loan origination process a breeze, but they also want to work with loan originators they know, like, and trust. Now that mask mandates have dropped and most folks have moved past the hunker-down phase of the pandemic, it could be a great time for some face time with your favorite realtors.
You shouldn’t restrict your partnership proposals to realtors. Local businesses and entrepreneurs in other industries can be great referral engines, too. After all, everyone needs a place to live, and most home buyers (and homeowners) will need mortgages.
Check out our article about generating new business through networking for more ideas on expanding your network and gaining new loan-origination opportunities.
Promote different types of loans
The traditional fixed-rate 30-year mortgage is often an ideal choice for home buyers with good credit, particularly when rates are ultra-low. However, a one-percent difference in interest rates can add up to a lot of extra payments over the life of these long-term loans.
Consumers are savvier than ever and can easily compare their options online before agreeing to take out a mortgage or a home-equity line, and you should assume your prospects are well-informed in advance. To make up for lower traditional-loan volumes, you and your team may want to consider promoting reverse mortgages, or other less interest-rate-dependent financial products, to your prospects.
If you decide to shift towards reverse mortgages and other home-equity financing options, you’ll likely wind up targeting different prospects than you were last year. These loans tend to appeal most to older homeowners who’ve paid off (most of) their original mortgages, so your marketing and messaging may need to skew older than it did in 2021. If last year was the year of Millennial homeownership, next year may prove to be another year in which Boomers make their hefty economic presence felt once again in the real estate market.
Build your brand for long-term success
When you boil it all down, these tips all contain a certain element of brand-building. Your brand is more than just a name and a logo – it encompasses everything your customers experience during their interaction with you, from the first touch to the final approval. A smooth and streamlined borrowing experience, coupled with fantastic end-to-end customer service, can help you close deals, gain referrals, and keep your business growing, no matter what interest rates are up (or down) to.
Have we missed any tips and tricks you think are essential to loan origination success as interest rates rise? Feel free to reach out to us with comments and suggestions – we’d love to hear from you!
And if you’re looking for an easy way to make things easier for your borrowers, give Floify a try today. Just fill out the form below to set up a personalized demo: